Everlengthening IVA - Part 2

[chris_]

Hi all,

I have just this minute received in the post my IP's reply to my polite but firm letter questioning their explanation of how the supervisors charges on my IVA have risen to £16K +

They keep making reference to work spent dealing with HMRC at the outset and also subsequent letters to me when I have been behind with a payment or late with my annual report. - they have not however offered any explanation as to how they keep getting there estimations so wrong year on year.

Here are a few points I have cherry picked out of the time sheets I have been given, see what you think.

(1) Original estimated fees of £3,200 was for 3 year IVA in proposal not for 5 year (So I assume then that 5 year costs should have been approx £5,400) - I have however never been notified of their original revamped estimated fees so I can only assume this.

Main points now -

(2) At first glance, costs of letters to me and for dealing with HMRC are nowhere near what I would call significant amounts (Melanie, you pointed out on my previous posts that the IP had put down only £800 for delaing with creditors)

(3) Every time the IP raises an invoice for themselves I get charged £10 for them writing out the invoice, then when they actually pay themselves a cheque I get charged another £10, THEN when they enter those figures into their cashbooks etc I get charged AGAIN - another £6 or £7. These figures are approx because they vary as I look at the sheets (Raising their own invoices has been as low as £7 but as high as £13) - so it costs about £30 for the IP to pay themselves.

(4) The supervisor to my IVA changed 2 years ago (same company, different supervisor) and I have been charged hundreds of pounds for them changing the name of the new supervisor on all documentation, and writing to creditors informing them of the changes. - I even got charged £23 for a phone call from the bank asking for passport ID of the new supervisor !.

(5) I made my first post on this forum on the 11th of April, between the 4th April and the 30th April I have been charged £500 for my IP checking my file(twice), writing a letter to tell me they might have to bankrupt me, and reading my letter and checking postings on IPS (what ever that is). - £500 !!!!!

(6) Bank reconciliations cost me anything between £10 and £30 each time.

(7) There are so many 'file reviews' and 'case reviews' it is unbelievable - each at between £10 and £40 a time - every month there seems to be an entry for something, and in some months 2 or 3.

I will now spend some time going over the 30 sheets of time/charges I have been given and will report back with more specific figures asap. In the meantime any comments on the above would be appreciated.

Chris.

[chris_]

Oh wow,

Just noticed that in 7 months at end of 2005 and into 2006 I was charged for 6 case reviews at £90 each, and the IP has put down three 'AGENTS' fees of £99, £234 and £234 on the 20th feb 2006 - what on earth could these be for in year 5 of my IVA ?

Chris.

[Adam Davies]

Unbeleivable !!
It really is a license to print money.
The sad thing is that your creditors have approved these payments,somethig is wrong,very wrong.
Regards

Andy Davie
IVA.co.uk Spokesperson and site manager
(aka Neverending)

Please check out my blog: http://andydavie.blogs.iva.co.uk

View my profile here:
http://www.iva.co.uk/andy_davie_profile.asp

[chris_]

Right Then here we are, I have analysed the 30 pages of time/costs sent to me by my IVA, and below are the figures for the last 4.4 yrs, not the first 1.5 years when things were being sorted out. The reason for this is that I am trying to show what the running of my IVA has cost once it was set up and running - I have already covered 'total' cost of my IVA in earlier posts.

Total charges for the year (not inc vat !)
2003 : £2,790
2004 : £2,688
2005 : £1,969
2006 : £4,103 !!!!!
2007 : £1,089 so far (including 500 just last month)


Now, I'll split them up best I can

Case Reviews ?
2003 : £175
2004 : £342
2005 : £584
2006 : £1,059 !!!!
2007 : £504 so far

File Reviews ?
2003 : £0
2004 : £124
2005 : £58
2006 : £131
2007 : £38 so far

Costs of IP producing IP's own invoices and paying themselves ?
2003 : £269
2004 : £196
2005 : £402
2006 : £165
2007 : £70 so far

Costs of IP's banking - writing cheques, transfering funds , reading bank statements and reconciling these with bank accounts etc ?
2003 : £641
2004 : £627
2005 : £616
2006 : £775
2007 : £187 so far

Costs of other filing, letters to me, creditors and other admin not directly attributable to above - also includes annual reports ?
2003 : £1,695
2004 : £1,362
2005 : £308 !!!!!!!!!
2006 : £1,973
2007 : £339 so far

What do you think of those figures for just dealing with HMRC and a bank.

I will post shortly with some of the things that looking through the sheets have been a real eye opener and I am sure many of these charges should not be chargeable.

Melanie, could you please pass your expert eye over these and let me know what you think ?

Thanks everyone

Chris.

[gimmewine]

Did you get a scale of charges at any point before the IVA? I am wondering if you could use some of the arguments used for reclaiming bank charges in that the charges are excessive and a penalty. I am off to bbc.co.uk to have a look at the legal arguments right now.

The mind really boggles. You would have imagined that dealing with HMRC would result in a higher charge in year one, with just basic charges in subsequent years.

[tracy.h]

To be honest Chris the more i read the more baffled i get i raelly cant understand where all these charges are coming from,it just seems so unrealistic and so unfair im sure Melanie will be able to advise.

[MelanieGiles]

Hi Chris

Well on paper those charges look much higher than I would expect to see for a fairly simple IVA - but of course I do not know the facts from your IP's perspective. Do you have also have a note of their actual hourly charge-out rates for those years?

On balance if your IP is not prepared to reduce the charges, I suggest your refer the matter to the Financial Ombudsman for them to review.

Just a point on the approval of payments, Andy, creditors agreed the basis of charge-out rates and time costs at the beginning of this IVA when an estimate of £3,200 was given. I am sure that they would not have sanctioned £16k - but clearly these charges have not been questioned throughout the IVA, as I believe that creditors rarely pay much attention to Supervisor's annual reports.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[chris_]

Hi Tracy.h and Gimmewine,

The only thing I got from my IP at the beginning was an estimation of the fees - no breakdown of individual costs/charges etc.

The figures I have highlighted only show part of the story and when you analyze the figures they have given me, you realise just what a rip off the charges are.

Once the IVA has got past the first 18 months or so you would think the IP's costs would be fairly stable and predictable, but they have charged me for every minute of absolutely anything they can link to my IVA. A new supervisor was appointed and I was charged hundreds of pounds while they changed all the paperwork and and bank accounts etc. They closed my local office down and then charged me hundreds of pounds for the staff at the old office to explain everything to the staff at the new office (or so it appears from the sheets they have sent me).

But the overwhelming shock I got when looking at the sheets was the scale of the charges simply for handling my money and paying themselves. They charge me for checking I have paid my contribution, they then charge me for transfering that contribution from the current account to the deposit account, they then charge me for them raising their own invoice, then for paying their own invoice and signing their own cheques, then for filing their invoice, then for checking the bank statement, then for reconciling the bank statement with the account and then for filling in their own cashbook and for filing the paperwork to do with paying their own invoice.

I even have found an entry whereby I have been charged £40 for someone to write out some cheques and forward them to their own colleague for signing! - they then charged me for signing them.

I have found charges where I have paid for them to check the work of their own staff, and where they have made mistakes with paperwork etc I have been charged for someone else to put it right.

It is unbelievable, I cannot describe it, you have to have the 30 sheets of charges in your hand to really appreciate what a rip off it really is.

There are some real gems like the £22.50 I was charged for the bank phoning the IP to request passport ID of the new supervisor so he could take control of the accounts. - One hell of a phone call at £22.50 and do you think that the bank would have phoned the IP for every account that it held or just once! - Have I paid this on behalf of every IVA account held, or has my IP charged every IVA £22.50 for the same phone call - I wonder......

FACT - My IP has charged me just short of £1,000 + vat every year just for paying themselves and for admin on a deposit account and a current account.

I'm still in shock as I have been trying to sort this lot out since 9 am this morning - the kind people at the IP sent me 30 sheets of charges that are all jumbled up - ie page 1 is not 2001 and page 30 is not 2007, but all the charges are mixed up and not by date or type - if I was a suspicious type I might think it was deliberate.

I will rant some more later, I think I really need Melanie's advice on these figures though.

Chris

[chris]

Hi Melanie,

Our replies crossed -

No I was never given a breakdown of costs for anything, just estimated costs for the whole IVA which just keep going up.

I agree with you regards the creditors, why should they care after 6 years what the fees are as long as they get their money.

The fact that there were 6 case reviews in seven months at £90 each in 2005/2006 without apparent reason is astounding to me - everytime the IP does anything outside of paying themselves, they seem to have a case review, everytime a new member of staff gets involved they have a case review. Reading the 30 sheets is quite illuminating. Did you notice on my figures above that for 2006 the fees were over 4K - this is at the end of year 5 of my IVA !!

Chris.

[MelanieGiles]

Chris

You are being incorrectly charged for this IP's very diligent time recording system - which seems to go beyond the bounds of the necessary. Remind me which firm you are dealing with? It's a gut feeling from me on this, not a definitive opinion, but I really think you may be entitled to some refund. IPs are not permitted to charge for time spent in dealing with their own internal administration - such as change of IP, unless the proposal specifically provides for this.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk

[gimmewine]

To be honest, I would write a stiff letter of complaint making sure to mention you intend to take this case to the Financial Ombudsman and carry out that threat if you do not get a satisfactory reply.

[chris_]

Hi Melanie,

The IP is Armstrong Watson and I am now looking at the original proposal to see what it says about charging for new supervisor etc.

Chris.

[gimmewine]

And? And? Not that I am impatient or anyth[;)]ing.

[chris_]

I have now checked my IVA proposal, and there is nothing about paying for change of supervisor, or 'internal administration' - there is a section on change of supervisor, but nothing about who would pay for this.

On the front page of the original proposal (which was originally for 3 years) the IP has signed a statement of truth that current charges (in 2001) were £45 - £90 hr + vat, and that time to be spent was anticipated to be no more than 50 hrs.

The time spent so far is down as 871 hours after nearly 6 years.


50 hours over 3 years = 16.7 hours/year - that doesn't even cover the time spent writing there own invoices and their own cheques.

Chris.

[MelanieGiles]

Chris

You do now need to take independent advice from someone who can study the whole case for you, rather than just seeing small snapshots as we do on this forum.

My view is that the time spent on your case is excessive, from the limited facts I have been given, however there will be another side to the story - there always is!

The financial ombudsman has, since 1 January 2007, been able to consider complaints against insolvency practitioners and is able to give independent guidance and mediation to both sides with regard to disputes resolution. Your IP firm will be liable for the costs of any investigation, if it is deemed that they have acted inappropriately.

And as ever, please keep us informed of your progress.

Regards, Melanie Giles, Insolvency Practitioner for over 20 years.

For further details contact me at http://www.melaniegiles.com and view my IVA blog at: http://melaniegiles.blogs.iva.co.uk